Tabcorp Holdings Limited. Investor Day

Transcription

1 Tabcorp Holdings Limited ACN Investor Day 18 October 2012

2 Disclaimer This Presentation contains summary information about the current activities of Tabcorp Holdings Limited and its subsidiaries (Tabcorp Group). It should be read in conjunction with Tabcorp Group s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at No member of the Tabcorp Group gives any warranties in relation to the statements or information contained in this Presentation. The information contained in this Presentation is of a general nature and has been prepared by Tabcorp in good faith and with due care but no representation or warranty, express or implied, is provided in relation to the accuracy or completeness of the information. This Presentation is for information purposes only and is not a prospectus, product disclosure statement or other disclosure or offering document under Australian or any other law. This Presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither this presentation nor anything contained in it shall form the basis of any contract or commitment. This Presentation is not a recommendation to acquire Tabcorp shares. The information provided in this Presentation is not financial product advice and has been prepared without taking into account any recipient's investment objectives, financial circumstances or particular needs, and should not be considered to be comprehensive or to comprise all the information which the recipient may require in order to make an investment decision regarding Tabcorp shares. All dollar values are in Australian dollars (A$) unless otherwise stated. Neither Tabcorp nor any other person warrants or guarantees the future performance of Tabcorp shares or any return on any investment made in Tabcorp Shares. This Presentation may contain certain 'forward-looking statements'. The words 'anticipate', 'believe', 'expect', 'project', 'forecast', 'estimate', 'likely', 'intend', 'should', 'could', 'may', 'target', 'plan' and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, financial position and performance are also forward-looking statements. Any forecasts or other forward looking statements contained in this Presentation are subject to known and unknown risks and uncertainties and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Tabcorp, that may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. You are cautioned not to place undue reliance on forward looking statements. Except as required by law or regulation (including the ASX Listing Rules), Tabcorp undertakes no obligation to update these forward-looking statements. Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. 2

3 Tabcorp senior leadership team TABCORP CEO & MD David Attenborough CFO Damien Johnston MD Fixed Odds Craig Nugent Exec GM Strategy & Business Development Doug Freeman Exec GM Distribution Adam Rytenskild Exec GM Corporate Legal & Regulatory Kerry Willcock Exec GM Marketing David Ginnane Exec GM Human Resources Merryl Dooley Exec GM Media & International Brendan Parnell CIO Kim Wenn 3

4 Market leading businesses Tabcorp has a unique multi-product, multi-channel gambling entertainment business Note: Above statistics are as at 30 September 2012 unless otherwise stated, rounded % of Revenue and % of EBITDA based on FY12 results, excluding Victorian Tabaret, and TGS expected EBITDA of approximately $55m p.a. from August

5 Investment highlights Tabcorp has an attractive investment case defensive earnings, strong cash flow and growth from new investments Quality integrated gambling entertainment business with multiple channels delivering market leading products Strong trusted brands Geographic diversification Long dated licences Unique multi-product / multi-channel distribution Strong cash generating businesses and defensive earnings profile Maintained market share in highly competitive market Product and technology innovation to lead both retail and digital channels Driving growth from new investments Business model underpinned by strong relationships with stakeholders 5

6 A successful 12 months Transition priorities were well executed Demerger implemented and separation completed Seamless transition to new Victorian Wagering and Betting Licence Successful launch of new Victorian Keno business Smooth transition out of Victorian Tabaret Well executed start up of Tabcorp Gaming Solutions (TGS) Launch of new international wagering hub Premier Gateway International (PGI) Refinancing of FY13 debt maturities Recent Federal Court judgement in the Victorian Betbox case confirmed Tabcorp s sole retail licence 6

7 FY12 financial performance Tabcorp delivered solid earnings growth in FY12 Group financial performance $m FY12 FY11 Change Revenues 3, , % Variable contribution 1, , % Operating expenses (416.1) (395.7) 5.2% EBITDA before impairment % D&A (133.5) (124.3) 7.4% EBIT before impairment % EBITDA by business $m FY12 FY11 Change Wagering % Media % Gaming % Keno % 7

8 1Q13 trading update Tabcorpʼs revenue growth continued into 1Q13. Wagering declined due to change in Victorian Licence terms Revenue ($m) 1Q13 1Q12 Change Wagering (2.4%) Media & International % TGS >100% Keno % Total - continuing operations % Victorian Tabaret - discontinued operations (54.2%) Refer ASX release 1Q13 Trading Update on 17 October 2012 for further details. Note: Reported wagering revenue impacted by Tabcorpʼs share of the Victorian JV changed from 75% to 50%, with new licence commencing 16 August TGS commenced operations 16 August Victorian Tabaret operations ceased 15 August Revenues do not aggregate to group total due to intercompany eliminations. 8

9 1Q13 trading update Wagering KPIs Growth in fixed odds revenues more than offset the decline in totalisator revenues in 1Q13 $m 1Q13 1Q12 Change Revenue by product Totalisator - Vic (0.1%) Totalisator - NSW (4.6%) Fixed Odds % Trackside % Luxbet % Turnover by distribution Retail Vic (1.1%) Retail NSW % Digital % Phone (8.7%) Other % Luxbet % Note: Victoria includes Victorian Racing Industry (VRI) interest under the JV Other includes oncourse and premium customers Refer ASX release 1Q13 Trading Update on 17 October 2012 for further details 9

10 Key strategies Strategies remain focussed on leadership in retail and digital Build on strength in retail Drive digital / account Geographic expansion Drive new products Optimise distribution footprint Deliver full suite of products and related services Lead with world-class self-service technology Broadcast rights retention Manage expiration of retail exclusivity in NSW June 2013 Expand TGS in Victoria Invest in digital to lead the market for online and mobile Expand Luxbet Strengthen customer relationships through CRM capability Expand international pooling through Isle of Man Drive export of Australian racing and import international product Establish TGS interstate Expand fixed odds offer Drive growth in Keno through new product expansion 10

11 Doug Freeman Market Trends 11

12 Australian gambling market Tabcorp is diversified across three core segments of the Australian Gambling Market Lotteries Operators 7 Ownership Govt/Corporate Revenue A$2.6b TAH share (Keno) A$0.3b Total Gambling Revenue A$20.1b (FY12 est) $2.6b 13% (12.7%) $3.3b 16% (16.2%) Wagering Operators 4 State TABʼs + 9 NT Bookmakers Ownership Govt/Corporate Revenue A$3.3b TAH share A$1.8b $3.7b 18% (18.3%) $10.6b 53% (52.8%) Casinos Venues 13 Ownership Corporate Revenue A$3.7b Wagering Gaming Casinos Lotteries Gaming machines Venues c. 5,500 Ownership Corporate Revenue A$10.6b TGS services in Victoria Source: Tabcorp estimates based on state regulatorsʼ publications, Australian Gambling Statistics 27 th Edition June 2011, internal data 12

13 Wagering market Tabcorp has improved market share in a highly competitive environment TOTAL AUSTRALIAN WAGERING MARKET Total Market = $26.0b Turnover Market Growth in FY12 = 3.0% ONLINE AUSTRALIAN WAGERING MARKET Total Market = $9.1b Turnover (FY11) Online share of Total Wagering Market = 36% (FY11) Turnover ($b) For personal use only (5.7%) 6.3 (25.1%) 6.4 (25.6%) 11.0 (43.6%) Growth = 2.4% Growth = 2.2% TAH growth = 3.6% 1.5 (5.8%) 6.5 (25.0%) 6.6 (25.4%) 11.4 (43.9%) Turnover ($b) (15.7%) 3.6 (39.8%) 1.8 (20.0%) 2.2 (24.5%) TAH growth = 14.3% INFORMATION NOT AVAILABLE FY11 FY12 FY11 FY11 FY12 Tabcorp Other TAB's Bookmakers Betting Exchange - FY12 Source: Tabcorp estimates based on Australian Racing Fact Book 2011, Annual Reports, internal data 13

14 Racing and Sport markets Tabcorp has grown turnover in the Racing and Sports markets AUSTRALIAN RACING WAGERING MARKET Total Market = $21.5b Turnover Market Growth in FY12 = 2.1% AUSTRALIAN SPORTS WAGERING MARKET Total Market = $4.0b Turnover Market Growth in FY12 = 3.6% (4.2%) 4.7 (22.6%) Growth = 2.6% 0.9 (4.3%) 4.9 (22.7%) (14.2%) 0.6 (14.4%) Turnover ($b) Growth = 2.0% 6.2 (28.7%) (28.7%) Turnover ($b) (40.9%) 0.4 (10.3%) Growth = 1.5% Growth = 4.4% 1.6 (40.1%) 0.4 (10.4%) (44.6%) (44.4%) TAH growth = 1.7% (34.6%) TAH growth = 5.2% 1.4 (35.2%) - FY11 FY12 - FY11 FY11 FY12 Tabcorp Other TAB's Bookmakers Betting Exchange FY12 Source: Tabcorp estimates based on Australian Racing Fact Book 2011, Annual Reports, internal data 14

15 7,000 6,000 Turnover ($m) For personal use only Lottery market Turnover growth in Tabcorpʼs Keno business has outperformed the broader lottery market AUSTRALIAN LOTTERIES FY12 Turnover ~$6.3 billion CAGR FY07 FY12 Total 4.1% 4.3% 5,000 4,000 3, , % 3.6% 2,000 1,000 0 FY07 FY08 FY09 FY10 FY11 FY12 Lotteries TAH Keno Non TAH Keno Source: Tabcorp estimates based on Annual Reports, internal data 15

16 Electronic gaming machine market The EGM market is a growth opportunity for our TGS business NUMBER OF EGMs IN AUSTRALIA (000ʼs) Total Number of EGMs = 188,000 Growth in EGM Numbers in FY12 = 1.1% GAMING TURNOVER BY STATE FY12 ($b) Total Market Value = $116.1b Turnover Market Growth in FY12 = 1.0% % % % % % % % % % % VIC NSW QLD SA Other Tabcorpʼs TGS business has more than 8,500 EGMs contracted in Victoria Source: Tabcorp estimates based on state regulatorsʼ publications, Australian Gambling Statistics 27 th Edition June 2011, internal data 16

17 Domestic consumer trends Tabcorp has developed capabilities to meet domestic consumer trends Digital devices & real time access Popularity of mobile devices & apps Social media Rapid adoption of new technology Virtual game based entertainment Integration of digital into retail Customer service & convenience are key Customisation of your experience 24/7 access is expected Speed & simplicity essential Cash is relevant challenged by digital Know the customer Globalisation Understanding of global trends & international practises Focus on international events (including racing & sport) Regulatory impacts Responsible gambling focus Advertising restrictions Concerns with sports integrity Illegal online markets 17

18 International gambling trends Tabcorp is further developing its capabilities in line with international trends Global pari-mutuel pools Pool size is critical 24/7 demand for product Increased interest in global racing Cost synergies through pooling hubs Online growth Technology enhances distribution Convergence across channels/devices igaming/casino/poker games New low cost entrants New non traditional competitors Regulatory challenges Sports betting popularity Live sports betting growth Growth in novelty markets Multi game betting Interest in fantasy sport Global deregulation is likely Tax revenue needed to fund deficits Concerns regarding illegal market impacts Potential for legislative change (eg. IGA in Australia, US Wire Act) 18

19 David Ginnane - Marketing 19

20 Tabcorp s competitive strengths Tabcorp has a powerful and unique arsenal of competitive strengths Customer Base Multiple Channels Multiple Brands Total Customers Wagering 1,800,000 Trackside 200,000 Luxbet 27,500 Keno Sky 1,400,000 1,500,000 1 Underpinned by an extensive customer base across multiple channels and brands Note 1: Represents active viewers 20

21 Customer acquisition Active TAB customers have grown by over 6% between FY11 and FY12 Active TAB account customers 350, , , , , ,000 50,000 0 FY10 FY11 FY12 Active customers New accounts opened Online and mainstream marketing programs generating strong YOY customer acquisition Up-weighted investment in CRM capabilities focused on driving customer retention and growth (includes specialist personnel, technology and analytics tools) 21

22 Customer retention and growth CRM is the new battleground in marketing as the cost of customer acquisition increases Appending transactional data to individual customers across multiple brands provides a powerful single view of customer CRM is simply about leveraging insights to deliver the right message at the right time, to the right customer over the right channel Customer Transaction Data Customer Insights and Segmentation Customer segments based on: Customer value Product preferences Channel preferences Wagering frequency Etc. Targeted messaging and content Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Segment 6 Segment 7 Segment 8 22

23 Brand choice in wagering Brand and Service are the most important drivers of betting choice for wagering customers Price alone is less influential in customer betting choice Source: TLE Customer Emersion and positioning research, n=1,000 non rejecters of betting, Oct

24 New TAB brand Our new TAB brand is a powerful differentiator TAB re-branding aims to further enhance one of Australia s most iconic brands TAB is the hero brand in the market, with 95%+ awareness* The new TAB brand clearly differentiates TAB in a cluttered market while at the same time creating a personality and emotional connection Brand Confusion Now: Masterbrand New logo, positioning & brand architecture New A&P programs New retail signage and merchandising New on-course executions *Source: Millward Brown Brand Health Monitor Autumn 2011 Base: Total national sample (18+ aware of sports or race betting and are non rejectors of sports or race betting) 24

25 TAB brand relaunch For personal use only Positioning the new TAB brand as contemporary, fresh and relevant for todayʼs customers 25

26 Product Innovation Product innovation capabilities are strong, underpinned by a ʻmarket driven / customer ledʼ development process Idea NPD Innovation funnel Idea Idea Idea Idea Concept Paper Business Case Regulatory Approval Build 1) Ideation: identification of customer opportunities 2) Concept paper: feasibility paper supported by customer research 3) Business case: rigorous commercial assessment, supported by detailed customer and market insights 4) Regulatory approval: rules, licences and / or legislation (as applicable) 5) Build: agile development processes, with customer touch-points as required 6) Launch: initially via pilot, with enhancements integrated per customer feedback Launch 26

27 Recent product innovations TAB epos Trackside Flexi Keno Touch Keno Roulette Super Multi 27

28 Adam Rytenskild - Distribution 28

29 Distribution: Broadest range of channels and products RETAIL 61% of wagering turnover 100% of Trackside 100% of Keno 100% of TGS Live Events 2% of wagering turnover 2,850 wagering venues 2,700 of these venues now have Trackside 3,510 Keno venues 170 TGS venues in Vic Wagering at 270 tracks and 5 sports stadiums in 3 states Live at 4,800 race meetings and 400 footy games DIGITAL FY13 vs pcp: digital transactions +28%, mobile sales +190% 20% of wagering turnover 90,000 new customer accounts opened in FY12 315k active account customers in FY12 Phone 6% of wagering turnover 600 seat customer contact centre 21m customer betting calls received last year 600k outbound customer calls to be made this year For personal use only Tabcorpʼs distribution is unique and delivers key competitive advantages Note: Figures quoted are as at 30 September 2012, rounded. Luxbet and Premium customers are not included in the table above. They represent 11% of Wagering turnover 29

30 Distribution: Strong retail partnerships Our strong retail partnerships are exclusive and underpin our retail business Tabcorp has exclusive agreements in place with the key retail industry bodies for both NSW and Vic AHA NSW & Clubs NSW: exclusive agreement for wagering & Keno to FY16 AHA Vic: exclusive agreement for wagering & Keno to FY24 2,090 venues have wagering, Trackside & Keno The Hotels and Clubs associations exclusively endorse Tabcorp with packages that provide Tabcorp benefits to member venues across all of our products As a result, we have developed strong relationships with the venues and with large venue groups Arrangements are also in place with: Vic Clubs: Community Clubs Association Vic and Vic RSL Agents Associations in NSW & Vic: 3 year agreements to FY15 Agencies Pubs Clubs Total Wagering NSW 210 1, ,130 VIC Total 300 1, ,850 Keno NSW ,770 Qld ,090 Vic Total 300 1,760 1,450 3,510 TGS Above data is as at 30 September, rounded 30

31 Distribution: Successful execution Retail expansion for wagering, Trackside and Keno largely complete. Net increase in venues over the last 12 months: 239 wagering, 500 Trackside and 736 Keno 148 Retail upgrades completed in the best agencies and licensed venues 102 licensed venues and 46 agencies upgraded Wagering self-service expansion complete 45% of all retail wagering transactions are now completed via selfservice (60% in Vic) New website and mobile apps launched Strong focus on mobile, including for Keno SKY vision now streaming on devices Customers are responding to our mobile apps (iphone, ipad, Android, mobi) 29% of digital sales are now made via a mobile device (up from 6% pcp) Vic Keno and TGS successfully launched For personal use only FY12 priorities have been well executed 31

32 Looking ahead Quality integrated gambling entertainment business with multiple channels delivering market leading products Build on strength in retail Optimise distribution footprint Deliver full suite of products and related services Lead with world-class self-service technology Drive Digital Invest in Digital to lead the market for online and mobile Strengthen customer relationships through CRM capability Drive new products Drive growth in Keno through new product expansion 32

33 Retail execution: next 12 months Retail excellence: optimise customer experience in the venues to drive performance Increase product penetration in hotels and clubs Improve merchandising standards Extend products across the existing network (TAB, Trackside, Keno) Improve Service: on-line training for front-line operators Low cost venue upgrades continue in 150 targeted locations Targeted digital integration within retail venues Integrate QR code, Near Field Comms, epos and location based offers into targeted retail venues Optimise betting data using smart screens For personal use only Drive growth from retail investments made to date 33

34 Retail execution: next 12 months Drive growth in Keno through new product expansion Expand Victorian Keno Launch and expand Keno Roulette in NSW Launch and expand Keno self-service in Qld 1 New initiatives 1 : Keno Player Card Keno Racing Note 1: Subject to regulatory approval 34

35 Digital strategy To be the Australian market leader for online and mobile Tabcorpʼs digital leadership position will be measured by: Growth in digital market share (currently 24.5%) Competitor benchmarking Customer choice Underpinned by promotions in Tabcorp s retail network through cross-channel integration of digital and retail Customers will choose Tabcorp: For the best digital gambling entertainment experience, everywhere every-time Best means: fast, personalised and social On their device of choice Supported by a seamless single relationship across all Tabcorp products and channels 35

36 Digital execution: next 12 months Tabcorp s immediate focus: Continued refinement of new website and Apps Launch new IPTV App for Samsung TVs Broaden digital payment options for customers New digital initiatives to deliver: FAST Design-in simplicity and speed for all interfaces, on all devices PERSONALISED Intelligent personalised wagering interfaces Betting wizards and tools SOCIAL Facebook-like features: share comments, follow ʻexpertsʼ, leader-boards For personal use only Tabcorp will continue to invest in digital initiatives 36

37 Distribution: The key points Tabcorp s unique distribution is delivering key competitive advantages Broadest range of channels, including a large retail network Broadest range of products, including unique games such as Trackside and Keno Strong retail partnerships with industry groups and venues, across all products Strong execution, with investments generating sales growth momentum Tabcorp s multi-product multi-channel strategy now moves into the next phase Drive growth from retail investments made to date Drive growth in Keno through new product expansion Invest in digital to lead the market for online and mobile Develop and retain intimate relationships with our customers across all products (CRM) For personal use only Tabcorpʼs multi-product multi-channel strategy is unique 37

38 Steven Wooding - Tabcorp Gaming solutions 38

39 TGS and the gaming machine value chain The gaming machine market can be segmented into four subcategories. TGS is focused on services and distribution Manufacturers/ Venue Owners Monitoring Content Suppliers Providers Services & Distribution Providers Manufacturers of EGMs Owners of EMGs (outside of casinos) Monitoring, reporting and other value added services Gaming services including installation, maintenance and management TGS Service offering Product Management Advice EGM and game upgrade Loyalty program Field services Venue design Marketing toolkit Account management Responsible gambling and compliance support TGS provides a comprehensive service offering Market competitors are largely consulting services only 39

40 TGS contracts TGS has over 8,500 EGMs signed up in Victoria, with 32% market share TGS contract summary Breakdown of Victorian EGM market For personal use only 10,000 8, year contract with termination option 1 2,000 Consulting Services only 24% Signed with TGS 32% Number of EGMs 6,000 4, year contract 6,500 2,000 Going Alone 22% - Full Service Competitor 3% ALH 19% 1. Termination requires 12 month notice at 5 year term, therefore a minimum 6 year contract. 40

41 TGS strategic growth platform Value improvement is likely to be delivered in 3 horizons Build on strength in retail Additional customer wins and CPI linked price increases Diamond Rewards Loyalty Program, 65,000 members signed to date Geographic expansion Expand service offering to Clubs and Hotels interstate NCSS acquisition provides key service capability in NSW Drive new products Introduce server based gaming and other value add initiatives 41

42 Craig Nugent - Fixed odds 42

43 Fixed odds market Tabcorp is the market leader and has grown market share FY12 trends were positive for Tabcorp: Growth in the wagering market is coming from fixed odds Fixed Odds Racing and Sport continued to grow Tabcorp s fixed odds market share increased Australian Wagering Market ($ turnover) Fixed Odds Market - Turnover Share $M 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, % 30.0% 20.0% 10.0% Parimutuel Fixed Odds Racing Fixed Odds Sport FY11 FY12 FY11 FY12 43

44 Fixed odds racing Tabcorp has increased its share of Fixed Odds market turnover significantly Tabcorp is the market leader Key performance drivers: Increased product offering to customers Strong risk management focus Wagering Fixed Odds Racing Turnover share FY12 FY11 FY10 TAB 17.1% 10.4% 5.4% Luxbet 6.6% 7.3% 6.4% Other Tote s 10.8% 9.6% 5.2% NT Bookmakers 15.3% 16.5% 18.6% NT Tote Odds 35.7% 38.6% 43.4% Other bookmakers 14.6% 17.8% 20.9% Source Tabcorp data. Excludes betting exchanges $m FY12 FY11 FY10 Turnover 1, Revenue Yield 12.4% 11.9% 12.1% No. 30,000 25,000 20,000 15,000 10,000 5,000 Fixed odds racing books: FY10 FY11 FY12 44

45 Fixed odds sports Sports betting continues to grow strongly Tabcorp is the market leader Growth has been driven by: Increased product offering to customers Price integration and advertising in key television programs Increased live betting In FY12 live betting turnover grew 20% and now accounts for 15% of TAB sports turnover Wagering Fixed Odds Sport Turnover share FY12 FY11 FY10 TAB 38.1% 37.2% 36.0% Luxbet 2.6% 2.6% 3.6% Other Totes 12.4% 12.2% 13.9% NT Bookmakers 41.1% 41.9% 39.7% Other bookmakers 5.8% 6.0% 6.7% Source Tabcorp data. Excludes betting exchanges No. Fixed odds sport books: 300,000 $m FY12 FY11 FY10 Turnover 1, , ,061.4 Revenue Yield 12.2% 11.4% 12.3% 250, , , ,000 50,000 FY10 FY11 FY12 45

46 Fixed odds sports Multis remain the most important sports product generating 68% of TAB sports revenue The Tabcorp super multi product is the best in the market with the ability for customers to: Take up to 20 legs, Take a flexi/systems bet up to 10 legs and Take multis that include racing & sport The sports turnover to revenue conversion remained strong in FY12, where Multis represented 35% of turnover, converting to 68% of revenue to the higher yields 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Sports turnover to revenue conversion Single vs Multi Multis Single Multis Single Multis Single Multis Single Turnover FY11 Turnover FY12 Revenue FY11 Revenue FY12 46

47 Fixed odds sports Tabcorp sports turnover is split evenly between domestic and international events American sports growth is outperforming domestic sports A diversified sports offering leaves Tabcorp less susceptible to a series of abnormal results in any one sport Product fees to sports controlling bodies are payable on domestic sports TAB Sports Product Sales Share FY11 vs FY12 25% 20% 15% 10% 5% 0% AFL Rugby League Soccer Tennis US Sports Other FY11 FY12 47

48 Luxbet During FY12 Luxbet continued to successfully grow revenue and customer acquisition Financials $m FY11 FY12 Turnover Net Revenue EBITDA Customers FY11 FY12 Active Customers 21,662 28,700 Direct Acquisition 6,671 7,263 Affiliated Acquisition 6,904 8,954 Frequent Customers 13,703 19,806 Yield focus has seen improvement from 3.7% to 4.9% in FY12 Marketing spend is targeting direct customer acquisition which is more profitable Marketing and Risk Management are aligned to retain customers, increase activity and maximise revenue 48

49 Luxbet - Domestic Product Offering FY12 / FY13 expanded its offering with new products for AFL and NRL, i.e. Pick Your Own Total and Pick Your Own Line Fixed Odds Offered on Racing and Sports Tote Derivative Racing Products Racing products such as Best Tote 150 AFL & NRL Markets Luxbet is the clear market leader Pick Your Own Line Select from multiple Lines on a match For personal use onlyluxbet has a highly competitve product offering for Australian sports Automated Sport Pricing Creation, Pricing and Settlement 49

50 Luxbet Digital Applications & CRM New look and feel Optimise functionality 1.5m ClickTale recordings Integrated homepage banner Increased functionality Improved usability Improved reliability For personal use onlytechnology, innovation and CRM are key focuses for Luxbet CRM Communicating to a Segment of One Best practice automated system All communications based on customer deposit and betting history Communication via , SMS, mail and outbound phone calls Built with gaming integration in mind Communication lifecycle includes: Welcome First purchase driver Weekly newsletter aligned to individual customer activity Special events Cross sell program Anniversary message and gift Birthday message and gift Automated reactivation program Slide 50 50

51 Luxbet Revolution For personal use onlynew brand launched 25 September 2012 Reinforce association with Tabcorp Highlight the unique element in the name Stand out from competitors 51

52 Brendan Parnell - Media and International 52

53 Business overview Sky Racing world leader in Australian and international race broadcasting Business overview Sky Racing, a premier thoroughbred, harness and greyhound racing multimedia broadcaster Sky Racing channels (Sky Racing1, Sky Racing2 and Sky Racing World) Sky Sports Radio Sky Racing Digital Extensive network coverage 5,400 retail outlets hotels, clubs and TABs Pay TV across 2.4 million homes International growth Export to 31 countries Importing international race content from 10 countries Co-mingling TV Channels Radio Sky Racing and Tabcorp Wagering Broadcast of racing vision and commentary stimulates betting Promotes Wagering through data and audio display of products Established relationships with the racing industry Retail Homes Digital 53

54 Sky Racing value chain Sky Racing costs base delivers operating scale Race Tracks Up Link/ Communications Channels and Services Distribution Customers 230 Australian tracks 270+ international tracks DVN Fibre Link from 170 tracks SNG Link from 60 tracks International feed via satellite/ circuits to and from NZ, USA, UK, South Africa and Asia Main Channels Sky Racing1 Sky Racing2 Sky Racing World Sky Sports Radio Additional Services Trackside Optus Satellites (x2) Internet Cable Mobile TV (streaming) Global (various) Racetracks Licensed venues TABs Homes Internet Airborne (Virgin) Mobile Global (various) Sky Text (form & data) Oracle Tipping Service OB-TV Production Interactive TV betting TAB Raceday Control 1 Broadcast rights fees expense $42m Communications and technology costs $21m Production and employee costs $33m Subscription and international revenues FY12 $149m 1 Audio and vision to meet regulatory requirements e.g. close off betting, final results 54

55 Broadcast rights Sky broadcasts every race, every code Thoroughbred Greyhound & Harness Type NSW (non Metro) Race Meets Domestic Rights Held New Media 512 QLD/NT 512 WA 253 SA 183 ACT 25 TAS 68 AUS 4,826 Sky has secured all media rights that have expired over the last three years Victorian and Sydney thoroughbred rights: Sky s contract with TVN expires December 2012 (domestic and international) Racing Victoria and Racing NSW plan to aggregate these rights with NSW non-metro Tabcorp is focused on achieving a commercial outcome in these negotiations SYD Metro and all VIC 612 X 1 Note: 1. Telstra holds TVN s New Media rights 55

56 International Tabcorp s international business is growing through export / import of racing vision International manages: Export of Australasian racing (including data, vision and co-mingled wagering) including Racing World Australia channel 1 Import of international racing Premier Gateway International (Isle of Man) Overseas marketing of Trackside and Keno Export revenue FY12 $23.1m Derived from wagering commissions and subscriptions from betting shops Revenue is shared with Australian racing Import revenue FY12 $105.7m (recorded in wagering) Derived from Australian betting after paying host nation product fees and shared with racing Country Notes: 1. Racing World Australia is a re-badged Sky Racing World. It is available in 14m UK homes daily on the BSkyB platform Market Share Export Market Share Import New Zealand 53% 60% Singapore 13% 8% USA/ Canada 9% <1% UK 9% 9% South Africa 3% 11% Hong Kong 3% 9% Other 10% 3% Total 100% 100% 56

57 Tabcorp co-mingling overview Tabcorp has been the pioneer of co-mingling domestically and is a leader in global co-mingling Co-mingling creates a superior customer proposition via less odds volatility and greater viability of returns Acquisition of new customers with bigger pools Enables expansion of products and operating hours International Partners SuperTAB pool Domestic partners South Africa New Zealand Western Australia Victoria Singapore ACT Note: Arrows represent the direction / flow of pooling funds 57

58 Premier Gateway International (PGI) PGI is a global gateway into Australian racing pools PGI expedites connectivity to global tote pools and reduces significant co-mingling establishment costs and time PGI will increase export exposure and returns for Australian racing PGI co-mingling volumes into NSW are currently exceeding $2m per week (since full approval in Sept 12) International Connections PGI Tabcorp pools NSW 1. Victoria Notes: Arrows represent the direction / flow of pooling funds Approval for Vic-TAB to host PGI wagers is pending 58

59 Damien Johnston - CFO 59

60 Capex Tabcorp invested significant capital into new investments in FY12 Capex Spend - Growth vs BAU Major capex projects $m Major capex projects in FY12 New Victorian Keno roll out TGS loyalty system and EGMs New tab.com.au website Venue expansion 100 Trackside NSW Outside broadcast infrastructure 50 - FY11 FY12 Growth BAU Growth capex: FY11: Trackside and TGS FY12: Victorian Keno, Trackside and TGS Key focus in FY13 Continuing investment in wagering multi-channel strategy TGS business roll out Keno expansion 60

61 Capital structure Tabcorp has a well diversified debt structure $m FY13 FY14 FY15 FY16 FY17 FY18 FY19+ Bank facilities Medium Term notes (May 2014) Tabcorp Retail bonds (May 2014) Tabcorp Subordinated notes US Private Placement 1. Tabcorp Subordinated Notes mature in March 2037, however illustrated at the first call date in

62 Entitlement to refund in relation to the Victorian Gaming Licence and the Victorian Wagering Licence Tabcorp Holdings Limited filed a claim in the Supreme Court of Victoria on 24 August 2012 seeking a payment from the State of Victoria of $686.8 million That payment relates to the State of Victoria s obligation which came into existence on the privatisation of the Victorian TAB and its listing on the Australian Securities Exchange in The Gaming and Betting Act 1994 provided for a payment by the State of Victoria to Tabcorp on the grant of new licences, irrespective of whether Tabcorp was the new licensee Tabcorp considers that it is entitled to a payment from the State of Victoria, which was triggered on the grant of the new Gaming Machine entitlements and the new Victorian Wagering and Betting Licence, and was payable by 23 August 2012 Tabcorp has a strong resolve to pursue this matter. It should be noted however that the outcome of the litigation cannot be predicted with certainty and Tabcorp may ultimately not succeed in recovering the payment from the State of Victoria. If Tabcorp is unsuccessful in its claim, there should be no further adverse financial effect on the Company other than arising from the payment of legal costs in relation to pursuing the claim For further details, see the ASX announcement made by Tabcorp in relation to this matter on 24 August

63 Conclusion Tabcorp is an attractive investment case Quality integrated gambling entertainment business with multiple channels delivering market leading products. Strong trusted brands Geographic diversification Long dated licences Our strategies are focussed on leadership in retail and digital through investment in our products, our customers and technology innovation We delivered solid earnings growth in FY12 And maintained revenue growth momentum into 1Q13 We have a strong cash generating business with defensive earnings profile underpinned by strong relationships with our stakeholders 63

64 64